Giving Energy Efficiency the Force of Law

A bill pending in the Assembly would create energy-efficiency surcharges to help curb NJ's ever-growing appetite for power.

For years, clean energy advocates have argued the most cost-effective way to deal with New Jersey’s growing energy needs is to sharply reduce energy consumption.

That goal might be realized if a bill making its way through the legislature becomes law. The bill (A-2529) aims to promote more energy-efficiency projects by establishing a new statewide program, similar to what has been done to spur the solar energy industry in the state.

The legislation directs the state Board of Public Utilities (BPU) to study whether to create energy-efficiency portfolio standards along the lines of the renewable portfolio standards that have been put in place for renewable energy. It also would require power suppliers to purchase energy-efficiency certificates from eligible projects, thus reducing energy use.

Treating Energy Efficiency as a Resource

To proponents, the bill might force the state to treat energy efficiency as a resource when it is looking to meet its energy needs.

"Right now, the only resource in energy is generation," said Matt Elliott, clean energy advocate for Environment New Jersey. "[The bill] will elevate energy efficiency and put it on a par with traditional forms of generation and renewable energy. When we look at the energy resources in the state, we should first look to energy efficiency instead of generation."

Jeff Tittel, executive director of the New Jersey Sierra Club, agreed, saying energy efficiency is the most important way the state can lower its greenhouse gas emissions and energy use. "It’s also the most cost effective," Tittel said.

The state’s energy master plan calls for reducing energy consumption by 20 percent by 2020, a goal most observers say will be hard to reach. New Jersey currently funds energy-efficiency programs through a surcharge, the societal benefits charge (SBC), on gas and electric customers. A big chunk of the money raised for the program, however, was diverted by the Christie administration to help balance the current state budget, leaving clean energy advocates fearful the program will be cut again in the future.

"What we are trying to do here may be the only game in town for energy efficiency two years down the road," Tittel said of the bill, which only needs to pass the Senate to go to the Governor’s desk.

Bigger Surcharges for Customers

There are some concerns about enacting a new subsidy for energy efficiency. If an energy-efficiency certificate is created, ratepayers will end up paying for it through higher societal benefit charges, which many argue are already too steep. For big energy users, the charge can top $1 million annually.

But others argue that adding more incentive to do energy-efficiency projects might help the state reach its goal of reducing energy use.

"Say you have a company making widgets," said Fred DeSanti, managing director of MC2 Public Affairs. "You’re too busy making widgets, which gets you a 10 percent profit, to think about an energy-efficiency project, which gets you an 8 percent return. They need incentives to make investments in things other than making widgets."

The bill was expected to pass yesterday, but was held over concerns dealing with another section aimed at promoting solar energy projects. Sen. Bob Smith (D-Middlesex) said he expects to deal with those concerns over the holidays and the bill will likely be posted for a vote on January 6, when lawmakers return to Trenton.